Late payment terms spike

Cashflow continues to be a major issue for Australian businesses, with D&B analysis showing a jump in late payments

January 27, 2012

Cashflow continues to be a major issue for Australian businesses with the number of severely delinquent payments jumping 28 percent over the recent Christmas period.

According to the latest Dun & Bradstreet (D&B) Trade Payments Analysis, during the December quarter last year, the number of bills left unpaid for 90 days or more grew by 20 percent compared with 12 months ago.

While overall payment terms fell to 52.3 days during the December quarter, terms remain elevated by 0.5 days compared with the previous year.

Queensland performed just above the national average at around 52.5 days.

D&B CEO Christine Christian warns that overdue accounts can have a serious run-on effect for the economy as a whole.

"When around two-thirds of all trade credit falls outside standard 30-day terms, we are talking about a significant portion of the nation’s economy effectively stagnating while it waits to be paid," Christian says.

"Businesses forced to wait up to three months or more for payment are being placed under tremendous financial stress to the point where day-to-day operations, such as paying employee wages, can be compromised," she says.

An industry breakdown shows that transportation firms were the quickest payers at 50.3 days followed by services with an average 50.4 day payment term and wholesale at 50.7.

Those contributing to the overall poor result were forestry (57.8 days) and mining (55.2).

Bigger businesses (500-plus employees) consistently maintain far longer payment terms than smaller firms, averaging 56.5 days since the December quarter 2009 compared with 50.8 days for those with six to 19 members of staff.

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